Concept Architecture
Concept
Theoretically, Dominance Analysis is the systematic process of identifying and removing healthcare interventions that are economically inefficient because they are either strictly dominated or extendedly dominated by competing alternatives. It is founded on the principles of economic efficiency, opportunity cost and incremental analysis, and exists to ensure that only potentially efficient interventions remain for cost-effectiveness evaluation.
Mathematically, Dominance Analysis is performed by comparing the incremental costs and incremental health outcomes of competing interventions after ordering them by effectiveness. Strict dominance is identified where an intervention is more costly and less effective than another, while extended dominance is identified where an intervention has a higher Incremental Cost-Effectiveness Ratio (ICER) than a more effective alternative. Dominated interventions are excluded before constructing the cost-effectiveness frontier.
In practice, Dominance Analysis is undertaken as an essential step in cost-effectiveness analysis before calculating final ICERs. Interventions are ranked by effectiveness, dominated alternatives are removed, and sequential ICERs are recalculated until only non-dominated interventions remain for decision making.
Purpose
Used to identify inefficient healthcare interventions, eliminate dominated alternatives, construct the cost-effectiveness frontier, support incremental cost-effectiveness analysis, and inform health technology assessment and resource allocation.
Mathematical Formulae
Primary Formula
For strict dominance:
?C > 0 and ?E < 0
where:
- ?C = incremental cost
- ?E = incremental effectiveness
Supporting Formulae
Incremental Cost-Effectiveness Ratio:
ICER = ?C / ?E
Extended dominance exists when:
ICER? > ICER???
after interventions have been ordered by increasing effectiveness.
Related Mathematical Methods
- Incremental Cost-Effectiveness Ratio (ICER)
- Incremental analysis
- Strict dominance
- Extended dominance
- Cost-Effectiveness Frontier
- Cost-Effectiveness Plane
Example
Five treatment options are evaluated and ordered by effectiveness.
| Intervention | Cost (�) | QALYs |
|---|---|---|
| A | 5,000 | 2.0 |
| B | 8,000 | 2.8 |
| C | 9,500 | 2.7 |
| D | 12,000 | 3.4 |
| E | 17,000 | 3.8 |
Intervention C is strictly dominated because it costs more than Intervention B while producing fewer QALYs. After removing C, sequential ICERs are recalculated for A, B, D and E to determine whether any intervention is subject to extended dominance before constructing the cost-effectiveness frontier.
Excel Implementation
| Function | Example Formula | Health Economics Application |
|---|---|---|
| SORT | =SORT(A2:C6,3,1) | Orders interventions by effectiveness. |
| IF | =IF(AND(B3>B2,C3<=C2),""Dominated"",""Retain"") | Identifies strictly dominated interventions. |
| FILTER | =FILTER(A2:C6,D2:D6=""Retain"") | Removes dominated interventions before ICER calculation. |
| INDEX | =(INDEX(B:B,ROW())-INDEX(B:B,ROW()-1))/(INDEX(C:C,ROW())-INDEX(C:C,ROW()-1)) | Calculates sequential ICERs for retained interventions. |
VBA (Optional)
Automate identification of strict and extended dominance, removal of dominated interventions, recalculation of sequential ICERs and construction of the cost-effectiveness frontier.
Sources
- Drummond MF, Sculpher MJ, Claxton K, Stoddart GL, Torrance GW. Methods for the Economic Evaluation of Health Care Programmes. Oxford University Press.
- Briggs A, Claxton K, Sculpher M. Decision Modelling for Health Economic Evaluation. Oxford University Press.
- Gold MR, Siegel JE, Russell LB, Weinstein MC. Cost-Effectiveness in Health and Medicine. Oxford University Press.
- Black WC. The CE Plane: A Graphic Representation of Cost-Effectiveness. Medical Decision Making. 1990.
- NICE. Health Technology Evaluation Manual.
Related Concepts (2)
Library
Publications
4
Methods for the Economic Evaluation of Health Care Programmes — Drummond, Sculpher, Claxton, Stoddart & Torrance, 4th Edition ed., 2015 (Oxford University Press)
The standard international reference text for economic evaluation methods in health care, covering cost-effectiveness, cost-utility and cost-benefit analysis, measurement of costs and outcomes, evidence synthesis, and the characterisation of uncertainty.
BookView source →Applied Methods of Cost-Effectiveness Analysis in Healthcare — Gray, Clarke, Wolstenholme & Wordsworth, 1st Edition ed., 2011 (Oxford University Press)
A practical, worked-example guide to conducting cost-effectiveness analysis, structured around outcomes, costs, modelling with decision trees and Markov models, and presenting results. Volume 3 in the Handbooks in Health Economic Evaluation series, developed from the University of Oxford course.
BookView source →Cost-Effectiveness in Health and Medicine — Neumann, Sanders, Russell, Siegel & Ganiats, 2nd Edition ed., 2016 (Oxford University Press)
The revised report of the Second Panel on Cost-Effectiveness in Health and Medicine, providing methodological benchmarks for CEA including the reference case, perspectives, discounting, and the valuation of health outcomes.
BookView source →NICE Health Technology Evaluations: The Manual (PMG36) — National Institute for Health and Care Excellence, PMG36 ed., 2022 (NICE)
NICE’s consolidated methods and processes manual for health technology evaluation, defining the reference case for economic evaluation (perspective, comparators, time horizon, discounting, EQ-5D, cost-effectiveness thresholds and the severity modifier) — the authoritative HTA methods reference for the English NHS.
Economic evaluation — National Institute for Health and Care Excellence, Technology appraisal and highly specialised technologies guidance manual ed., 2026 (NICE)
Official methods guidance for comparative economic evaluation, including incremental analysis, ICERs, comparators and the treatment of dominated options.
Web GuidanceView source →
Frequently Asked Questions (6)
What is dominance analysis?
The systematic process of comparing interventions to identify which are dominated, strictly or through extended dominance, before calculating incremental cost-effectiveness ratios.
Source: Drummond MF, Sculpher MJ, Claxton K, Stoddart GL, Torrance GW. Methods for the Economic Evaluation of Health Care Programmes. 4th ed. Oxford University Press; 2015.
What steps does dominance analysis follow?
Options are listed in order of increasing effect with their costs alongside. Any option costing more and producing less than another is removed as dominated. Incremental ratios are then calculated between each remaining option and the next less effective one. Any option whose ratio is lower than that of the option below it is extendedly dominated and removed, and the ratios are recalculated for the reduced set. The process repeats until the ratios rise consistently across the remaining options.
Source: Drummond et al. 2015
Why does dominance analysis have to be iterative?
Because removing an extendedly dominated option changes the comparators for the options around it, and the recalculated ratios can reveal a further option that is now extendedly dominated. A single pass therefore does not guarantee a clean set. The procedure ends when the incremental ratios increase monotonically across the surviving options, which is the condition indicating that no further removals are possible. Presenting the frontier alongside the discarded set is more informative than reporting the surviving ratios alone, since it shows what was considered as well as what survived.
Source: Drummond et al. 2015
What does dominance analysis produce?
A reduced set of options forming the efficient frontier, each with an incremental ratio against its immediate predecessor, and a discarded set with the reason for each exclusion. The frontier can then be compared against the threshold to select the most effective option whose incremental ratio remains acceptable. Reporting the discarded options and why they were excluded matters, since a reader cannot otherwise tell whether an omission was a judgement or an oversight.
Source: healtheconomics.wiki
What errors occur in dominance analysis?
The commonest is calculating every option against a single common baseline rather than against the next less effective survivor, which produces ratios that cannot be compared with a threshold. The second is omitting the extended dominance step entirely, which leaves options on the frontier that should not be there. The third is applying the procedure to options that are not mutually exclusive, where independent options should instead be ranked individually and funded downward until the budget is exhausted.
Source: Drummond et al. 2015
How does uncertainty affect dominance analysis?
Removals based on point estimates can be reversed once distributions are considered, so an option discarded as dominated may be optimal in some simulations. Probabilistic analysis handles this by comparing expected net benefit across all options rather than by sequential removal, which avoids the problem entirely and is the preferred approach where uncertainty is being characterised. Deterministic dominance analysis remains useful for structuring the comparison and should not be treated as settling which options are viable.
Source: Briggs, Claxton & Sculpher 2006
Trust Record
Verified by Dr Darrin Baines
British health economist
Professional identity: darrinbaines.org
Verification date: 6 Aug 2025
Content version: 1.0.0
Canonical Identity
- Persistent URI
- https://healtheconomics.wiki/concept/dominance-analysis
- Term code
- HE-EE-CEA-021
Stable URI · Machine-readable · Resolvable · CC BY 4.0